Posts Tagged ‘Capitalism’

The Little Red Hen

– by Doug Smith –

attributed: Summit Sun 8 July 1971

Once upon a time, there was a little red hen who scratched about and uncovered some grains of wheat. She called her barnyard neighbors and said, “If we work together and plant this wheat, we will have some fine bread to eat. Who will help me plant the wheat?” “Not I,” said the cow. “Not I,” said the duck. “Not I,” said the goose. “Then I will,” said the little red hen, and she did.

The wheat grew tall and ripened into golden grain. “Who will help me reap my wheat?” asked the little red hen. “Not I,” said the duck. “Out of my classification,” said the pig. “I’d lose my seniority” said the cow. “I’d lose my unemployment insurance,” said the goose.

Then it came time to bake the bread. “That’s overtime for me,” said the cow. I’m a dropout and never learned how,” said the duck. “I’d lose my welfare benefits,” said the pig. “If I’m the only one helping, that’s discrimination,” said the goose.

“Then I will,” said the little red hen. And she did.

She baked five loaves of fine bread and held them all up for the neighbors to see. They all wanted some, demanded a share. But the red hen said, “No, I can rest for a while and eat the five loaves myself.”

For when the farmer came, he said, “You must not be greedy, little red hen. Look at the oppressed cow. Look at the disadvantaged duck. Look at the under-privileged pig. Look at the less fortunate goose. You are guilty of making second-class citizens of them.”

“But….but,” said the little red hen. “I earned the bread.”

“Exactly,” said the wise farmer. “That is the wonderful free enterprise system; anybody in the barnyard can earn as much as he wants. You should be happy to have this freedom. In other barnyards, you’d have to give all five loaves to the farmer. Here you give four loaves to your suffering neighbors.” And they lived happily ever after, including the little red hen, who smiled and clucked: “I am grateful. I am grateful.”

Michael Moore, Closet Supply-Sider

Michael Moore is at it again, attacking capitalism and corporate America, this time with the film “Capitalism: A Love Story.” Capitalism is “legalized greed,” and “anti-Jesus,” he says. And he is sick and tired of special tax breaks for corporations.

Or is he?

Moore has found a tax break for corporations he actually likes. And his arguments in favor of it sound more like they’re coming from a supply-sider than the populist he professes to be.

Michigan, where Moore lives, offers the most generous tax breaks and subsidies for film producers in the country. For every dollar you spend making a movie in Michigan, taxpayers will give you back 42 cents. Moore actually relocated his postproduction team from New York City to Michigan just to take advantage of these tax credits.

But Moore is not just a recipient of these tax credits. His hypocrisy goes deeper. As a member of the Michigan Film Office Advisory Council he has been a cheerleader for them. Appointed to the post by Gov. Jennifer Granholm in September 2008, Moore sees himself as an ambassador who will help bring the film business into the state.

And how does he profess to bring the film business to Michigan? By offering it tax breaks.

In a revealing two-hour interview with the Michigan weekly Northern Express, Moore is candid about his support for tax credits (he calls them “incentives”) that he disdains for any other business. Listen to him recount a conversation with his agent and Hollywood uberliberal Ari Emanuel when the tax credits were first introduced in early 2008:

“When the new film incentives were established, some in Hollywood said that it was an Internet rumor,” he told the paper’s Rick Coates. “My agent Ari Emanuel called and asked if this was real. I told him, yes, it is real, and he responded, ‘I am getting this out to all of my clients because no state has anything close to this.'”

Apparently there is nothing like a generous tax credit to get Hollywood liberals motivated.

Moore then goes on to report on the success of the program. “Just after the incentives went into effect, about a dozen projects came into play,” he said. “Then two months ago we were at 20, and as of today I am aware of 32 projects being considered for Michigan.” Tax credits apparently spur growth.

But in this instance, Moore’s generous tax credits amount to the working class in Michigan paying taxes to subsidize high-paying Hollywood jobs. Moore admits this, explaining that people can make $52,000 in six months with these jobs.

“My staff usually takes off a year after working a year because they have made the equivalent of two or three years’ worth of wages in one year,” he brags. “So then you have free time to maybe write that book you wanted or open that business you dreamed of.”

This is no doubt cold comfort to a Michigan middle class just trying to make ends meet with double-digit unemployment. But never mind. Moore is proud of the fact that Michigan has “the best incentive program anywhere” for Hollywood studios.

Champion of the working man, always willing to stick it to corporate America, Moore then suddenly offers choice advice to his fellow citizens on how to deal with his Hollywood corporate friends. “When Hollywood comes calling, do not jack up your prices, or they will not be back,” he told the paper.

These generous tax credits mean that Michigan taxpayers are writing large checks to major Hollywood studios.

For example, taxpayers sent $5.7 million to California-based Parallel Media for shooting “High School,” a school stoner film, in the town of Howell. According to the Michigan Film Office 2008 annual report, taxpayers paid out close to $48 million to Hollywood studios to create 2,800 part-time jobs.

According to Moore, these tax incentives — imagine it! — “will mean jobs and money being pulled into Michigan.”

That’s a funny thing to say, given that Moore always professes to hate tax cuts and tax credits for corporations. But remember, Michael Moore hates capitalism and corporate welfare. He really does. He told us so on camera.

• Schweizer is a research fellow at the Hoover Institution and author of the just-released “Architects of Ruin: How Big Government Liberals Wrecked the Global Economy — And How They Will Do It Again If No One Stops Them” (Harper).

Leftist Capitalism

IBD: 2 Oct. 2009

Hypocrisy: Apart from a healthy appetite, what do the 1.3-billion-strong Red Chinese have in common with filmmaker Michael Moore? Living a Marxist creed while practicing capitalism.

The paradox of New York City, home to Wall Street, arranging for the Empire State Building to shimmer in the red and yellow of the communist Chinese flag to celebrate 60 years of tyranny is bad enough.

What about a documentary filmmaker who has lined his pockets with millions by tearing down a corporate CEO, celebrating Fidel Castro’s Cuba and now directly savaging America’s free-market system in his latest flick, “Capitalism: A Love Story”?

Mainland China may have long since toned down its state-sanctioned cult of personality surrounding the greatest murderer in world history, Mao Zedong. But as far as political freedoms go, it remains very much a communist country.

Its adoption of capitalist economics, however, has turned it into an economic powerhouse, though you’ll never hear its safely entrenched dictators admit as much.

By the same token, you’ll never see Michael Moore doff his ever-present baseball cap to the economic freedom that brought him a fortune. “Capitalism did nothing for me,” he claimed as he entered the movie house in Washington, D.C., where his film premiered Tuesday night.

Moore was asked about amassing “a fortune of over $50 million,” thanks to filmgoers shelling out cash to capitalist theater chains and capitalist DVD stores in capitalist countries.

He complained of having to “pretty much beg, borrow and steal,” that “the system is not set up to help somebody from the working class make a movie like this and get the truth out there,” and that Disney “tried to kill” his highest-grossing movie, “Fahrenheit 9/11,” for which he reportedly got $21 million.

Moore’s health care documentary, “Sicko” — for which he took half the profit, according to Vanity Fair — ends with Americans arriving in communist Cuba, where they finally get the care they desperately need.

If you think that story rings true, just give it a try sometime.

Moore first came to notice in 1989 for “Roger and Me,” in which he lambasted General Motors CEO Roger Smith. Fortune magazine estimates his films have grossed more than $300 million.

A common thread runs through such self-serving hypocrisy. For Beijing to admit that freedom is the key to China’s success would threaten its rulers’ permanent power.

For Michael Moore to admit he’s the beneficiary of capitalism would expose his slickly produced propaganda as just hot air.

Why Michael Moore Is Dead Wrong

Michael Moore’s new film, “Capitalism: A Love Story,” was released this month. I’ve neither seen nor read reviews of the film, except for a short piece in the London Telegraph titled “Michael Moore film calls capitalism evil.”

Aware of Michael Moore’s previous films, I know that it will be at best a misleading story about capitalism. So let’s do some defensive mental preparation, not about the film but about what is and what is not capitalism.

Capitalism is an economic system characterized by private ownership and control over the means of production. The distribution of goods and services and their prices are mainly determined by competition in a free market. Under such a system the primary job of government is to protect private property, enforce contracts and ensure rule of law.

State Ownership

There has never been a pure free-market capitalistic system just as there has never been a pure communist or socialist system, where there is government ownership of the means of production and each individual has equal access to society’s resources.

However, we can rank economies as to whether they are closer to capitalism or closer to communism or socialism. If one ranked countries according to whether they were closer to the capitalistic end of the spectrum or the socialistic or communistic end, then ranked countries according to per capita GDP and finally rank countries according to Freedom House’s “Map of Freedom in the World,” he would find a pattern that is by no means a coincidence.

The people in those countries closer to the capitalist end of the economic spectrum have far greater income and enjoy greater human rights protections than those toward the socialist and communist end.

According to the London Telegraph article, Moore’s film features priests who say capitalism is anti-Christian by failing to protect the poor. This is pure nonsense and revealed as such by asking, “If you’re an unborn spirit, condemned by God to a life of poverty but allowed to choose the country in which to be poor, would you choose a country near the communist end of the economic spectrum or the capitalist end?”

If you chose the United States, you’d find that according to the government surveys, the typical “poor” American has cable or satellite TV, two color TVs, and a DVD player or VCR. He has air conditioning, a car, a microwave, a refrigerator, a stove, and a clothes washer and dryer, and whether he has health insurance or not, he is able to obtain medical care when needed.

Try to find that in Cuba, Russia, China or North Korea. If we buy into the nonsense of Moore’s priests, the world’s poor people are incredibly stupid. Whether fleeing legally or illegally, their destination country is likely to be closer to capitalism than their departure country.

Most of our country’s serious problems can be laid at the feet of Congress and the White House and not at capitalism.

Our Undoing

Take the financial crisis. One-third of the $15 trillion of mortgages in existence in 2008 are owned or securitized by Fannie Mae, Freddie Mac, Ginnie Mae, the Federal Housing and the Veterans Administration. Banks didn’t mind making risky loans and Wall Street buyers didn’t mind buying these repackaged loans because they assumed that they would be guaranteed by the federal government: read bailout by taxpayers.

Under a capitalist system, financial institutions would not have been intimidated or encouraged into making risky loans and neither would they have been bailed out if they did so.

Social Security, Medicare and its coverage of prescription drugs have an unfunded liability that exceeds $100 trillion. When those roosters come home to roost, they will make the financial meltdown we’ve been though look like child’s play.

Not withstanding all of the demagoguery, it is capitalism, not socialism, that made us a great country, and it’s socialism that will be our undoing.

Obama seemed to agree…..BUT….

America’s Tired Protectionism

By INVESTOR’S BUSINESS DAILY | 15 Sept. 09

Trade: President Obama has fired the opening salvo in a trade war with China by slapping 35% tariffs on its tires. But besides giving China a kick, this protectionism will harm Americans across the economy.

Read More: Business & RegulationSen. Reed Smoot and Rep. Willis Hawley, the two protectionists who deepened the Depression and fueled the rise of militarism ahead of World War II, would have liked the move to keep Chinese tire exports out of the U.S. through tariffs.

There’s no dumping going on — just China’s success in the U.S. market, which has raised its share to 17%.

We can’t blame the president for sneaking in the tariffs late Friday. Raising tariffs is nothing to be proud about. In this case, tariffs jumped from 4% to 35% on Chinese tire imports under Sec. 421 of the 1974 Trade Act, intended to control surges in imports.

But the markets paid attention. Global stock futures tumbled over the weekend. Asian markets dropped sharply Monday, fearing a wave of U.S. protectionism.

China called the U.S. move “rampant protectionism” and vowed to investigate dumping charges against U.S. auto parts and chicken, two industries that have made inroads into the China market. The Asian giant also vowed to challenge the U.S. at the World Trade Organization.

Why should we care? This protectionist move, meant to please a single labor union, takes a big bite out of our global trade credibility, making us look like a country that can’t compete in global markets.

Earlier this year, Obama seemed to agree when the leaders of the Group of 20 declared they wouldn’t worsen the global financial crisis by enacting protectionist measures.

But by mid-year, that strong free-trade declaration was already fraying badly from indirect protectionism in Europe, along with the U.S.’ “Buy-American” provisions in the $787 billion stimulus package. Even so, the tire tariffs this week mark a new low.

“Economically, the idea is ominous,” said Thomas Pruse, an economist at Rutgers University and an expert on trade protectionism. “Not a single tire company thinks it will change the dynamics of the tire industry.” And none supported the tariffs.

Now, we can expect other countries to hike tariffs, going after the U.S., the world’s third biggest exporter, hard. Worse still, expect more requests for tariffs as U.S. special interests line up for their cut of the protectionist pie.

Who pays? On tires, don’t assume for a minute the Chinese will.

The tariff costs will go straight to American consumers who will, as of Sept. 24, pay higher tire prices. First casualty: those who buy low-cost tires, the market where Chinese tires dominate. Big U.S. companies ignore this market because it’s not profitable enough.

Amid a slowdown of tires and an inventory buildup, “I estimate there will be 8 million fewer tires consumed in the first 12 months,” said Pruse. “These are 8 million tires that need to be replaced, and there’s plenty of evidence people are delaying the replacement of their tires, creating safety risks. If (poorer people) can’t replace tires at $120, how can they do it at $200?”

So brace for an upsurge in tire-related crashes on U.S. highways.

But aside from what amounts to a tax on the poor, industry will be hurt, too, and quite a bit of it downstream from mere tires.

Tariffs will add $100 to the price of a new car, cutting into U.S. auto sales, Pruse noted. It will also harm much of the tire installation industry, all of which is U.S.-based. Some 15,000 U.S. workers will lose their jobs from this tire tariff, he said.

The auto industry will get a double-whammy if the Chinese retaliate on auto parts coming into the Chinese market, cutting into sales on that front too. Sales of auto parts in the booming Asian market are critical to the U.S. auto industry’s recovery strategy.

Meanwhile, the United Steelworkers Union, which brought the Sec. 421 complaint, is hurting its own members. No new jobs will be created by this, said Pruse.

The Chinese imports may be replaced by imports from other countries, like India — meaning the U.S. jobs aren’t coming back.

Other unions will take hits too. Longshoremen who unload tires from ships and Teamsters who transport them to tire shops will lose jobs and maybe members. So much for union brotherhood.

It all amounts to the loudest signal yet from this administration that we’re moving toward a level of protectionism not seen since the days of Herbert Hoover and FDR.

This will cost us more than China, with the consequences ricocheting across the globe. Has nothing been learned from history?

Biogel heals severe brain injury

IBD: 15 Sept. 09

An injectable gel could heal injured brain tissue after a traumatic injury, a study by Clemson Univ. in S.C. suggested. The gel made up of both natural and synthetic sources could stimulate production of the patient’s own stem cells in the body. The gel also helps create new blood vessels. The team succeeded in restructuring a vascular network in mice, and said the technique could be applied to healing human head injuries caused by car accidents, falls and gunshot wounds.

MY COMMENTS: STEM CELLS! has anyone noticed? Hundreds of wonderful examples of “patients own adult stem cells” with miraculous results – yet we’ve seen NO results with embryonic stem cells. Even with all that federal money poured into every university and labratory in America. None have identified any ‘good’ results.

Netanyahu Won’t Halt Building

15 Sept. 09 IBD

Israeli PM Benjamin Netanyahu rejected U.S. calls to freeze construction in the West Bank and east Jerusalem, angering Palestinians. Seeking to jump-start peace efforts, U.S. Mideast envoy George Mitchell has been pressing Israel to halt settlement building. The Palestinians claim both areas, captured by Israel in the 1967 Mideast war.

MY COMMENTS: Land captured in war that Muslims started in a surprise attack by 5 or 6 Muslim nations doesn’t belong to “palestinians” and we shouldn’t allow them to claim anything. When will we keep our nose out of this issue?

Unions’ Gains Not Without Pain

IBD: 15 Sept. 09

As the AFL-CIO hosted a Mon. night screening of Michael Moore’s “Capitalism” at its annual convention in Pittsburgh, Big Labor reveled in its strongest political influence in decades. The administration has sided with unions, notably on China tire tariffs and auto bailouts. But card check legislation has stalled, with public support for unions at an all-time low.

Bonus Babies

INVESTOR’S BUSINESS DAILY | 2 Feb. 2009

Capitalism: It’s more than a bit scary when a powerful politician suggests that getting a bonus might get you prosecuted as a criminal. But that’s where we are today. Welcome to the new world of post-bailout capitalism.

Read More: Business & RegulationWe have to admit: For an industry that posted enormous losses in 2009 and is now on the government dole, $18.4 billion in “performance” bonuses for Wall Street executives seems a tad much. President Obama called it “shameful.”

“There will be time for them to make profits,” he said Thursday with Treasury Secretary Tim Geithner by his side. “And there will be time for them to get bonuses. Now’s not that time. And that’s the message that I intend to send directly to them, I expect Secretary Geithner to send to them.”

Vice President Joe Biden was even more pointed: “I’d like to throw these guys in the brig,” he said.

Democratic Sen. Chris Dodd had this to say to those executives who take home big bonuses: “If you do it, I’m going to bring you before the (Senate Banking) Committee.”

Perhaps the ire is deserved. It’s hard to defend Wall Street executives’ pay. Last year, the Dow closed off 34%, its third-biggest loss ever, as trillions in wealth evaporated. And financial companies lost nearly $50 billion for their shareholders.

Yet executives gave themselves hefty bonuses, claiming they had to do so in order to keep talented people.

Maybe so. But it’s sad this should even be a part of our daily discussion, and it only shows just how twisted things have become in our once-capitalist system.In the brave new world of post-bailout economics, politicians — not the marketplace — decide what it’s appropriate to pay executives.

At one time, businesses competed intensely, and success or lack of same guided what executives would earn. But no more.

Today, with hundreds of billions of dollars flowing from public coffers into the private financial sector to prop up failing companies, politicians feel quite within their rights to harangue, cajole, even threaten those who take their money.

This is one of the unforeseen consequences economists warn about. Executives who thought they’d get access to Uncle Sam’s wallet without strings attached now find they’re beholden to elected officials — not the market.

It would be far healthier for the economy if it was the companies themselves, operating within market-imposed discipline and under the watchful eye of shareholders, that decided how executives were compensated.

Sadly, Wall Street today seems to suffer from what economists call an “agency problem.” In a healthy company, managers and execs work for the shareholders. But after a government bailout, taxpayers — that is, politicians — are boss.

And, as always, this leaves a lot of room for politicians to demagogue the issue, always on behalf of “the taxpayers.”

That’s what’s happening now in Washington, and it isn’t healthy.However outraged you might be at the executives’ $18 billion in bonuses, that pales in comparison to Congress’ pork-filled, 680-page, $825-billion stimulus bill.

As the bill moves toward law, polls show voters are having second thoughts about the whole thing.Mainly, they don’t like the waste — or the fact that only about 10% to 15% of the spending can even remotely be called “stimulus.”

Does this explain why politicians have suddenly gone into such high dudgeon over executive bonuses? After all, if you were about to misspend hundreds of billions in taxpayer money, wouldn’t you want a scapegoat too?